Shares of Burford Capital Ltd. hit an all-time high Wednesday after the world’s largest litigation finance firm reported strong first-half profit growth, as well as a sizable boost in the amount of money it spent backing certain cases.
Burford’s shares, which are publicly traded on the London Stock Exchange, were trading about 15 percent higher midday in the U.S. and briefly hit a record high of £19.58, about twice their value from a year ago. In the first half of 2018, Burford’s income rose 17 percent, to $205.2 million.
In a sign of anticipated future growth, the company also invested $540 million in new legal finance commitments in the first six months of the year; up 10 percent from the same period last year and 170 percent more than the same period in 2016.
Burford CEO Christopher Bogart said the share price surge was a sign that his company’s results had answered a lingering question among investors: Were Burford’s record growth rates last year an anomaly or a sign of the company entering a “new normal” level of acceptance among the legal market?
“When we put out results that were not only as strong as 2017, but in fact stronger, I think that effectively answered the question for investors,” Bogart told The American Lawyer. “This was a new normal and 2017 was not an anomaly.”
Burford was put on a new trajectory in late 2016 when it purchased Gerchen Keller Capital LLC, a Chicago-based competitor, for $160 million. On that front, Burford said it had invested nearly all of the private fund capital raised by the legacy GKC business. Burford expects to raise a new fund this year.
The company said it invested $88 million in one-off or “single-case” litigation, which was more than double the same period last year. Burford’s “portfolio” business, which invests in multiple cases at a time, grew investments by 70 percent, to $205 million.
Burford also provided a new statistic aimed at showing how law firms often grow their relationship with the financier, from financing one-off cases to funding a portfolio of litigation. The company said 75 percent of law firms who had used Burford in a one-off case had brought it a second opportunity to invest in. Of those new opportunities, 40 percent were portfolios of litigation.
Burford’s asset recovery business, one of its smaller business lines, also showed greater potential in the first half of 2018. The company said it invested 11 times more money in asset recovery cases in the first six months of the year, $49 million, than the same period a year ago. Asset recovery cases involve work enforcing judgments that a defendant has avoided paying.
Bogart attributed that growth in part to Burford’s decision to do judgment enforcement work on a contingent fee basis. Two years ago the company created its own law firm, Burford Law, to do that work. Burford Law now employs three lawyers. Bogart said he expected growth in the business as it competes against law firms and investigative companies that typically work on a billable-hour model.
“Offering [that service] on a risk basis is, in fact, quite unusual,” Bogart said.
It has also found the company garnering unusual headlines. Last week, Burford made news for financing the ex-wife of a Russian oligarch as she seeks to collect a $646 million judgment made in her favor by a U.K. court. Burford’s work on behalf of Farkhad Akhmedov’s former wife, Tatiana, helped to impound a $500 million yacht in Dubai that was ordered to be handed over to her. The matter is now caught up in Dubai courts.
The yacht, named Luna, takes a crew of about 50, has nine decks, and features two heliports, a spa and a swimming pool, according to CNBC. Commenting on the case in its half-year report, Burford said, “To be clear, Burford does not finance divorce litigation,” adding, “we are simply in the business of helping clients collect their judgments, and the techniques are the same for a contract judgment or a divorce judgment.”